Business Essentials Flashcards
Command Economies
Communism and socialism
Communism
Government owned and operates
Socialism
Government owns critical industries, individuals own non-critical
Market economies
Economic basis is supply and demand, political basis is capitalism
Capitalism
Encourages private ownership of the factors of production
Operates under the concept of supply and demand
Mixed market economies
Combination of command and market economies
Degrees of competition
Perfect, monopolistic, oligopoly, monopoly
Perfect competition
Many sellers, product is basically identical
Monopolistic competition
Few to many sellers, product is unique to some buyers
Oligopoly competition
Few large supplied, products are similar
Monopoly competition
One producer, unique product
Organizational boundaries
Separate the organization from its environment
Aggregate output
Measure of economic growth
Total quantity of goods/services produced by an economic system during a given period
Productivity
Measure of growth that compares the output of an economic system with the resources that are needed to produce the output
Measuring economic growth
GNP and GDP
GNP
Value of all goods and services produced by a national economy within a given period regardless of production location
GDP
Value of all goods and services produced by a national economy within a given period with domestic factors of production
Balance of trade
Exports - imports
Economic stability
Amount of money available and quantity of goods and services produced are growing at the same rate
Threats to economic stability
Inflation, deflation, unemployment
Types of unemployment
Frictional, seasonal, cyclical, structural
Political-legal environment
Reflects the relationship between business and government
Socio-cultural environment
Customs, values, attitudes and demographic characteristics of the society in which an organization functions
Porters 5 forces model is used to…
Analyze the competitive situation in an industry
Outsourcing
Paying suppliers and distributors to perform certain business processes
Divestitures and spinoffs
Selling part of an existing business or setting it up as a new corporation
Acquisitions and mergers
Horizontal, vertical or conglomerate mergers
Strategic alliances
Two or more companies temporarily join forces, often called a joint venture
Ethics
Standards or moral values that dictate what is right and wrong
Influences on ethical behaviour
Family, peer group, experiences
Organizational objective change…
Infrequently
Core principle organization values change…
Never (unchanging)
Strategies and practices change…
Frequently
Corporate social responsibility
The idea that a business should balance its commitments to individuals and groups that are directly affected by its activities
Fair-trade movement
Designed to help workers in developing countries receive fair pay for their work
Responsibility towards consumers
Rights of consumers, collusion, ethics in advertising
Cheque kiting
Writing cheques against money that has not yet arrived in the bank account
Insider trading
Using non-public information to gain from the sale of stock
Triple bottom line reporting
Financial reports, social audits, sustainability reports
